Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 7th March 1973.

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Photo of Mr Ken Lomas Mr Ken Lomas , Huddersfield West 12:00 am, 7th March 1973

Of course, I accept that. Nevertheless, the logistics ought to be looked at. Having served in the North Atlantic Assembly, I speak with some experience when I say that I do not believe that our defences should be run down. It is essential that we have an adequate defence. However, certain economies could be made when expenditure is running at the fantastically high figure that it is at present.

Whatever our differences may be, we must all be agreed that this Budget was introduced against the very sombre backcloth of an international monetary crisis and increasing industrial unrest at home. It may be that the Chancellor could not avoid the first, though that is being charitable because the right hon. Gentleman inherited a surplus of about £600 million or £800 million and in the course of two and a half years has turned it into a £1,000 million deficit. However, the right hon. Gentleman could have avoided the industrial unrest that we see at the moment.

There are some items in the Budget which are to be welcomed. When I spoke in the course of one of the debates on last year's Finance Bill I made strong representations to the Chancellor of the Exchequer that soft drinks should be relieved of VAT. A firm in my constituency, Ben Shaw Limited, was extremely concerned about this. I am glad to know that the right hon. Gentleman has taken my suggestion on board. I know, too, that my hon. Friend the Member for Widnes (Mr. Oakes) fought the same battle in respect of crisps and that he will be delighted that the right hon. Gentleman has taken the line that he has.

Having said that, it is worth asking whether it was necessary, in view of our current problems, for the right hon. Gentleman to introduce VAT at 10 per cent. Would not it have been better to have brought it in at a lower rate, say, 7½ per cent., or even to have decided on a tier system with rates of 7½ per cent., 10 per cent. and possibly 12½ per cent.? This is a matter which I believe the Chancellor should reconsider, because people at the bottom end of the wage scale will feel the effect of VAT more than anyone else.

At a time when the right hon. Gentleman is appealing for wage restraint or imposing a freeze, it is totally wrong for him to be giving tax concessions to the wealthier sections of the community. We should remember that one man's tax relief is that same man's pay rise. It is no use telling people at the bottom end of the income bracket that they cannot have pay increases when, as from 1st April, those in receipt of a fair amount of money will get increases in the form of having to pay less tax.

I welcome the step taken by the Chancellor against land speculation, timid though it is. It has not gone far enough. There is no doubt that the house prices that newly-married couples have to pay today are largely determined by the price of land. This is forcing up house prices to a tremendous extent. This is not just a matter requiring certain taxes to be levied. It is essential for the State to take over the land and then lease it to people who wish to build houses. It was once said that God left the land to the people but that he made very bad arrangements for its management. That is even more true today.

I regret that no action was taken on family allowances. Here was an area where the lower-paid worker with family responsibilities could have been helped. Apparently the Chancellor has turned his back on them.

The Opposition have been urging the need for food subsidies in order to keep down and control the price of food. The Chancellor said nothing on this subject. It is obvious that he is not interested in trying to keep down the price of food.

The right hon. Gentleman could have said that the Housing Finance Act, which will push up rents once again on 1st April, was to be held in abeyance.

A part of the right hon. Gentleman's speech was devoted to rates. He said that in the event of an increase of more than 10 per cent. the Government would give half. This is not good enough. If rates are allowed to go up 10 per cent. or more it will be one more imposition upon the responsibilities of the lower-paid worker.

I hope that this Government or a future Labour Government will look at the system of rating, recognising how ancient it is, and come to some conclusions on the lines that there should be some form of local income tax instead.

I welcome the concessions on children's shoes and clothing. But one is entitled to ask why they were not announced before. In the past 12 months the point was made again and again that it was essential that these were relieved of VAT. The right hon. Gentleman set his face resolutely against making any change. Yesterday he repented. He said that he was a sinner and that he had been wrong. If he were wrong about that, on how many other occasions has he been wrong and thereby affected the country's economy?

I welcome the increase in pensions, but again it is too little and too late. It is all very well saying that this is a sizeable increase. It is. But it has to be, in order to keep up with the ever-increasing cost of living. What is more, by the time that pensioners get the increase, for which they have to wait another six or seven months, it will already have been partly eroded by the increase in prices. Since the General Election, food prices have gone up by more than 25 per cent., rents by over 30 per cent. and rates by a similar amount.

If the Government want the support of ordinary people and trade unionists, they must earn that support by acting in a very positive way. The Chancellor of the Exchequer spoke of the increasing amount of industrial unrest and the present round of strikes. I wish to declare my interest as a Member sponsored by the National Union of Public Employees. I can assure the Government that the ancillary workers in the National Health Service are on strike not because they want to be but because of the blatant, gross and totally inflexible behaviour of this Government in operating their so-called "fair" prices and incomes policy.

I have always been and always will be an unrepentant believer in a prices and incomes policy. I say that because, as a Socialist, I believe in a planned economy, and if we are to plan the economy, we must plan growth rates, investment rates, income rates, and of course prices.

Since this Government came to office they have adopted a policy of taking on the public sector. It is the public sector which has suffered most in every instance. The Government have shown that they are not concerned about a just and fair incomes policy, no matter what the Secretary of State for Trade and Industry may have said today. It is a fact of life that the vast majority of ancillary workers in the NHS earn less than £20 a week. No one can deny that that is a very low rate of pay. It is obvious that they have a very special case—more special perhaps than that of gas workers and others. Yet these very people who are on extremely low rates of pay are suffering all the injustice that goes with it.

What is more, many of them are caught in the poverty trap. A married man with two children who is earning less than £22 a week, which scores of thousands are, qualifies at the moment for family income supplement, free dental treatment, free milk and free school meals. If the increase offered by the Government were taken, many of these families would be worse off because it would just about take them over the threshold and they would lose many of the social benefits that they receive at present.

The strike by the ancillary workers is not wanted by anyone—the union, the members, the hospital authorities, and, I am sure, the Government—so we must find an answer to it.

The first point to be borne in mind is that under phase 2 the £1 plus 4 per cent. is manifestly unfair. A man earning £50 a week would get £1 plus £2, a total increase of £3 in his pay packet, whereas a man earning £20 a week would get £1 plus about 80p. This is not narrowing the gap; it is widening it. I have always thought that we should try, if possible, to narrow the gap between those who have and those who have not, between the rich and the poor, rather than widen and make greater that gap. This is what is wrong.

The Leader of the Liberal Party said that we in the Labour Party were not concerned about the lower-paid workers. Yet he and the rest of his party voted for phase 2 of the Counter-Inflation Bill which perpetrated this injustice on the lower-paid workers.

Just as I suggest that the Government must act, so must the Trades Union Congress. There must be some kind of voluntary restraint. It is totally wrong that those with the highest wages or salaries in industry should get the largest increases and those with the lowest wages and salaries should get the lowest increases. The whole policy on which the Counter-Inflation Bill and the whole Budget judgment is based—that groups of workers should work out between themselves what the wage bill is and what the employers can afford and then get the £1 plus 4 per cent.—simply means that a man already in a group of lower-paid workers will always be lower paid. There is something fundamentally wrong with that.

The trade union movement, the Government, and some of my hon. Friends must recognise that if a large industry—be it, for example, the Ford Motor Company—makes a fantastic profit, it is wrong that those profits should simply go to the people in that industry. They should be spread across the board so that all can benefit. The public service and the hospitals service cannot make profits. I do not know how productivity is measured in the hospital service. It cannot be measured by the number of bed pans carried in the course of a day. Hospital workers are performing an essential service to the community.

In the context of the Chancellor's speech I should like to offer a word of advice to some trade unionists. I recall reading a play by John Osborne in which one of the characters said, "There are people who spend their time looking forward to the past." This is a fair criticism of some people in the Government and in the trade union movement. This is not 1926. There is no need, no call, no necessity, as far as I can see, for a general strike. It would not achieve anything, except perhaps to turn the average individual against the possibility of returning a different Government from that which we have who are introducing a measure such as we had yesterday.

By all means let us be militant, but let us think where our militancy will lead us. The militants must think things through. We must think again on many issues. Of course I want the Labour Party to win the next election, but to do that, as we are doing, we must be able to present a good alternative policy.

I reject the free-for-all policies of the Conservative Government. I do not want that kind of society. I think that the Chancellor or another Minister in the course of this debate should come forward with some proposal which could get the Government off the hook and would help to solve the problems with which the nation is faced.

We have been told that those who consider that they have a special case can refer it to the Pay Board which can look at it and that something may be done in the autumn. But the Pay Board is an agent of Government policy. Therefore it will not work. That is why there will not be co-operation by the trade union movement. The Pay Board should be totally independent of the Government. If, looking at the cases submitted to it, in its judgment it decided that there was a special case, then it should be given authority to make an interim payment immediately or at least in the autumn in a retrospective manner.

I believe that what we heard yesterday was a mini-Budget. I believe that we shall have another Budget in two, three or four months. Inevitably we shall have another Budget. That is why I agree with the hon. Member for the Cities of London and Westminster (Mr. Tugendhat) who said that it was wrong on this, the occasion of the annual Budget—I agree that it is an archaic system—to look forward to something dramatic happening in either March or April. We must change our attitude. Therefore, I accept the Budget knowing that it will be changed drastically during the next few months.

I sincerely believe that the Government are taking this country and the average individual down the path of disaster. We want a different form of Government. But if we are truly democratic we must accept the laws of the country, however bad they might be. The only way to change the law is to change the Government. I am convinced that the feeling of the people of this country will create a situation where the Government will be compelled to fight on their miserable record and I am sure that they will be defeated and that a Labour Government will take their place to the benefit of all.